Apple can sell iPhones and make a lot of money doing it.
Crazy thought, as you look at your iPhone or the iPhones around you, but it’s been top of mind to investors as they judge the short-term viability of one of the world’s most valuable companies. For the last three quarters, iPhone shipments were on a decline.
This time around Apple proved that it’s still a tech giant worth owning. The company set a new record for unit sales, which also helped them bring in a record amount of revenue for the product.
“We’re thrilled to report that our holiday quarter results generated Apple’s highest quarterly revenue ever, and broke multiple records along the way. We sold more iPhones than ever before and set all-time revenue records for iPhone, Services, Mac and Apple Watch,” Apple CEO Tim Cook said in a statement Tuesday.
“Revenue from Services grew strongly over last year, led by record customer activity on the App Store, and we are very excited about the products in our pipeline,” Cook said.
Apple sold 78.3 million iPhones, which brought in $54.38 billion. That’s up from 74.8 million units the year prior, totaling $51.64 billion.
Overall, Apple brought in $78.35 billion for the quarter.
“For better or worse, Apple is a phone company now,” Kim Forrest, VP and senior equity analyst at Fort Pitt Capital Group, told Mashable. “We think the services is important in that it keeps people in the Apple hardware platform, but always remember the company is first and foremost a hardware company.”
Apple’s other products aren’t looking too shiny, however. Sales of iPads were 13.1 million this quarter, a 19 percent drop in units and 22 percent drop in revenue from the year prior.
Luca Maestri, Apple’s chief financial officer, defended the iPad sales numbers, saying they were ahead of expectations.
But iPhones, iPads and other handheld products aren’t the only products to consider. Cook positioned Apple as having a future in wearables. Apple now offers several high-end headphones including its AirPods earbuds and Beats headphones.
“There’s a huge growth potential for wearables going forward,” Cook said.
For Apple, services, which includes sales from the App Store, Apple Music and Apple Pay, has become more important than ever. It’s clear when you look at the numbers.
Once again, Apple pulled in a record quarterly revenue number for services that puts Facebook’s quarterly sales in perspective.
Apple services revenue of $7.2bn exceeded Facebook’s TOTAL revenue of $6.8bn in most recently reported quarter. Wow!
Ben Wood (@benwood) January 31, 2017
Apple is putting services on track to be a tech giant itself this year. “It’s going to be a Fortune 100 company this year, but we have a goal to double it over the next four years,” Maestri said.
Sales from the App Store are the current driver, up 43 percent in the quarter from the year prior.
But Apple has been bolstering its efforts in music. Beyond single-music sales from iTunes, Apple has Apple Music, its subscription streaming system. Apple is arming its Spotify competitor with exclusives. The service reached more than 20 million subscribers in December, compared to Spotify’s more than 40 million.
“We are the market leader in digital music,” Cook said.
Transactions on Apple’s payment service Apple Pay, available on the web and on mobile, are over up by more than 500 percent from the year prior. It’s expanded the service internationally, opening in Japan, Russia, New Zealand and Spain.
What happened to China?!
Success isn’t taking off everywhere. Revenue from Greater China was down 12 percent from the year prior. Apple saw a 20 percent growth in revenue in Japan.
Cook said that iPhone 7 was the most popular smartphone in Greater China, citing data from Kantar, and the company did set a new record for revenue from services in the region.
“The challenges that are there is one, the currency, has devalued 6 percent,” Cook said. “Hong Kong remains a very, very difficult market … I’m encouraged with the significant improvement, but we’re not without challenges there.”
This post was updated following the 5 p.m. call with investors.